An unsecured bond that only creditworthy firms can issue is called a

Question

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Debentures are unsecured bonds that are issued by creditworthy firms based on their credit rating. Unlike collateral trust bonds or mortgage bonds, debentures do not have any backing from a specific asset, making them riskier for investors. Junk bonds, on the other hand, are issued by firms with low credit ratings and are considered high-risk investments. Therefore, the correct choice would be (C) debentures as they match the description provided in the question.

An Unsecured Bond That Only Creditworthy Firms Can Issue Is